Mortgage Recast vs Refinance Calculator

The two operations touch different parts of the contract, and that is the whole distinction.

A recast keeps your loan. Same note, same rate, same maturity date, same lender. You pay a lump sum toward principal, and the servicer recalculates the monthly payment so the smaller balance amortizes over the time remaining. Nothing is underwritten. There is no credit check, no appraisal, no income verification, and no new title work. Servicers that offer it set their own processing fee and minimum lump sum, so ask yours for both.

A refinance replaces your loan. A new lender (or the same one) writes a new mortgage that pays off the old one. Everything is negotiable — rate, term, structure — and everything is underwritten. You qualify again on today's income, today's credit and today's appraised value, and you pay closing costs that typically run into the thousands.

Fannie Mae's Selling Guide sets out how principal curtailments (the lump-sum payment a recast starts from) are applied, and the CFPB explains what to weigh before refinancing (both read October 2026).

All figures computed with the amortization engine on this site. Starting point: $400,000 borrowed at 6.5% over 30 years, 60 payments made, balance $374,444, payment $2,528.27, 300 months remaining. Available lump sum: $50,000. Closing costs and servicer fees are excluded from the interest columns and discussed below.

Four things in that table are worth sitting with.

Rows two and three cost the same interest. $332,757 either way. A recast does not save you any interest that the lump sum was not already saving — the money does the work, and the recast only decides whether the benefit arrives as a lower payment or an earlier payoff. That is the most misunderstood fact in this comparison.

The lowest payment is not the cheapest loan. Refinancing to a fresh 30-year term gives the smallest monthly number and costs $5,976 more interest than a recast at a full percentage point higher rate, because you have re-extended the clock by five years.

Matching the term is what makes a refinance win. Taking the 5.5% rate over 25 years rather than 30 costs $150.21 more per month and saves $65,466. That single choice is worth more than the rate itself.

Doing nothing is expensive. $384,038 against $332,757. If the $50,000 is genuinely spare, deploying it is worth roughly $51,281 regardless of which mechanism you choose.

1. Is today's rate materially below yours? If the answer is no — and for anyone holding a 2020–2021 vintage mortgage it emphatically is — stop here. Refinancing into a higher rate to access a lower payment is almost always a bad trade, and a recast gives you the payment relief without surrendering the rate. If today's rate is meaningfully lower, continue.

2. Do you have a lump sum? If not, a recast is unavailable — it requires one, and servicers set minimums. Your choice is refinance or nothing.

3. Will you keep the loan past break-even? Divide closing costs by the monthly saving. Costs of $6,000 against a saving of $536.11 break even at about eleven months on these figures, which is comfortable. Costs of $6,000 against a $150 saving break even at forty months, which is not, if you might move.

4. Will you qualify? A recast asks nothing. A refinance asks everything, on today's terms. Self-employment, a recent job change, a thinner credit file or a softer appraisal can end the conversation, and none of them affect a recast.

5. Can you match the term? If you refinance, take a term no longer than what remains on your current loan. Re-extending is where most of the advertised saving quietly disappears.

Keeping a rate you cannot replace. This is the dominant case right now. Millions of US mortgages are fixed at rates far below anything currently available. For those borrowers a refinance is not a lower payment, it is a permanent increase in the cost of every remaining dollar — and a recast is the only way to convert a lump sum into payment relief without touching the rate.

Buying before selling. A buyer who closes on a new home before the old one sells often ends up with a larger mortgage than intended. Recasting after the sale proceeds arrive resets the payment to what it should have been, cheaply and without underwriting.

Irregular income. A bonus, an inheritance, or a business distribution can be converted into a permanently lower fixed obligation without borrowing again.

When you would not qualify today. Recasting involves no underwriting at all, which makes it the only option available to some borrowers who are otherwise in perfectly good standing.

Two constraints: not every loan is eligible — FHA, VA and USDA loans generally cannot be recast, and many jumbo and portfolio loans set their own rules — and servicers impose minimum lump sums and processing fees. Ask your servicer specifically; the answer is loan-level, not lender-level.

Capturing a lower rate. The only one of the two that can change your rate, and when the gap is a point or more it dominates everything else in this comparison.

Changing the structure. Moving off an adjustable rate, out of an interest-only period, or away from a balloon maturity. A recast cannot do any of these; the structure is part of the note.

Removing mortgage insurance. FHA loans written since 2013 generally carry mortgage insurance for the life of the loan regardless of equity, and refinancing into a conventional mortgage is the standard exit. On a conventional loan, PMI can usually be removed without refinancing once the loan-to-value threshold is reached — so check that first.

Taking cash out. A recast moves money in. A cash-out refinance moves money out. They are opposite operations, and only one of them is available when you need the equity rather than want to reduce it.

A mortgage recast vs refinance calculator has to run both sides on the same loan, so this page stacks two calculators. Option 1: Recast your current loan takes your current balance, rate, years remaining, the lump sum, your servicer’s recast fee and any extra monthly payment you plan to keep making afterwards. It returns the old and new payment, the monthly saving, the interest the lump sum avoids, the new balance, the number of months the saving takes to repay the fee, and an amortization schedule you can switch between before and after the recast. There is no default fee: enter the figure your servicer quotes.

Option 2: Refinance into a new loan takes your remaining balance, current rate and years remaining, then the new rate, the new term (10 to 30 years) and the closing costs, with a box for rolling those costs into the loan instead of paying them in cash. It returns the old payment, the new payment, the monthly saving, the break-even month — the number that decides whether a refinance survives contact with your actual plans — and a lifetime cost comparison that counts every remaining payment on both loans plus any costs paid in cash, alongside the new loan’s amortization schedule. Put the two payments side by side and weigh the difference against the refinance’s closing costs, a new underwriting process, and whatever your current rate is worth keeping. Our standalone mortgage recast calculator runs the recast side on its own if that is the only question you have.

For the recast side, the arithmetic is short enough to do directly: subtract the lump sum from your balance, then amortize that figure at your existing rate over the months you have left. Our mortgage recast calculator does it in one step. Compare the resulting payment against the comparator's refinance payment, and weigh the difference against several thousand dollars of closing costs, a new underwriting process, and whatever your current rate is worth keeping.

One last check that costs nothing and occasionally settles the question outright: confirm whether your existing loan is even recast-eligible before you spend an evening on any of this.